India, New Zealand finalise free trade agreement to deepen economic ties

By Admin

23 Dec, 2025

India and New Zealand have formally concluded negotiations on a long-awaited Free Trade Agreement (FTA), marking a major milestone in strengthening bilateral trade, investment and services cooperation between the two nations. The talks, which began in May this year, were successfully wrapped up following high-level discussions between Indian Prime Minister Narendra Modi and New Zealand Prime Minister Christopher Luxon, who described the agreement as a significant step forward in the growing partnership between the two countries.

Growing bilateral trade relationship

The India–New Zealand trade relationship has shown steady growth in recent years. In FY25, total bilateral trade stood at approximately $1.3 billion. India’s exports to New Zealand were valued at $711.1 million, while imports from New Zealand amounted to $587.1 million. This balanced trade flow highlights the complementary nature of both economies and the potential for further expansion under the new FTA framework.

Key highlights of the free trade agreement

According to Prime Minister Christopher Luxon, the FTA will eliminate or significantly reduce tariffs on around 95 per cent of New Zealand’s exports to India. This is expected to substantially improve market access for New Zealand businesses in one of the world’s fastest-growing major economies, with a consumer base of nearly 1.4 billion people. Over the next 20 years, the agreement is projected to increase New Zealand’s annual exports to India from about $1.1 billion to nearly $1.3 billion.

Addressing tariff imbalances

One of the most significant aspects of the agreement is its focus on correcting the existing tariff imbalance between the two countries. New Zealand currently maintains a relatively low average import tariff of 2.3 per cent, with more than 58 per cent of tariff lines already duty-free. In contrast, India’s average import tariff stands at 17.8 per cent. Tariff liberalisation under the FTA is therefore a major gain for New Zealand exporters, offering more competitive pricing and improved access to the Indian market.

India’s export profile to New Zealand

India’s exports to New Zealand are diverse, with strong representation from energy, textiles and pharmaceuticals. Aviation turbine fuel emerged as the single largest export item, valued at $110.8 million. This was followed by clothing, fabrics and home textiles worth $95.8 million. Pharmaceutical exports reached $57.5 million, reflecting India’s strong global position in generic medicines.

Machinery exports, including turbojets, accounted for $51.8 million, while petroleum products such as diesel and petrol together contributed more than $70 million. Other important export categories included automobiles and auto components, paper and paperboard, electronics, iron and steel, seafood such as shrimps, basmati rice and gold jewellery, showcasing India’s broad manufacturing and agricultural capabilities.

New Zealand’s export strengths to India

New Zealand’s exports to India are largely driven by raw materials, agricultural produce and industrial inputs. Wood and wood products, along with wood pulp, play a key role in supporting India’s construction, packaging and paper industries. Exports of steel and aluminium scrap highlight India’s growing dependence on recycled metal inputs to support sustainable industrial growth.

In the energy and heavy industry sectors, New Zealand supplies coking coal and high-value aviation equipment such as turbojets. Agricultural and animal-based products also form a significant share of exports, led by wool, dairy ingredients like milk albumin, and fresh fruits including apples and kiwifruit.

Services trade as a critical pillar

Beyond merchandise trade, services form a crucial pillar of the India–New Zealand economic relationship. In FY24, India’s services exports to New Zealand were valued at $214.1 million, driven primarily by IT and software services, telecommunications support, healthcare and financial services.

New Zealand’s services exports to India were considerably higher, at $456.5 million. Education dominated this segment, largely supported by Indian students studying in New Zealand. Tourism, fintech services and specialised aviation training also contributed significantly to New Zealand’s services exports.

Looking ahead: deeper economic integration

With the conclusion of FTA negotiations, both India and New Zealand expect deeper economic integration, stronger supply-chain linkages and expanded opportunities for businesses and service providers on both sides. Reduced tariffs, improved market access and enhanced cooperation in services are likely to encourage investment, innovation and long-term partnerships.

As the agreement moves toward implementation, the India–New Zealand FTA is poised to become a strategic driver of trade growth, supporting economic resilience and reinforcing ties between two dynamic and complementary economies.